Tag of the Month: Key Performance Indicators

In the beginning, the chances for success of a startup are often not clearly foreseeable. The startup team works hard on building the business and has at least a subjective feeling about whether they are on track for success with their idea. To make this feeling measurable, so-called “key performance indicators“ (KPIs) are used. But what exactly are KPIs? How do they shed light on progress?

The term originates in the field of business administration. KPIs are used in a wide array of organization structures in order to capture the success, performance, or utilization of complete or individual processes, projects, and departments. The performance data are statistically gathered over a longer period of time. Thus, the numbers enable comparison with a past time period or let you recognize tendencies/developments. Due to their relation to performance, key performance indicators occupy a special role in management and controlling in order to be able to control and evaluate a business.

Which KPIs are captured and evaluated depends largely on the individual company goals. The specific goals determine the statistically measurable data that give insight into the goal and performance fulfillment. In addition to universal KPIs, such as sales growth, there are also industry-specific key performance indicators. For instance, the conversion rate for measuring the effectiveness of advertising efforts in the marketing industry, the number of licensees/software users in the software industry, or the number of new customers and orders in eCommerce.

A young company should begin identifying and gathering the relevant performance data at an early stage, so that their own development is continuously “documented”. Key performance indicators also help to focus on the set goals and not to lose sight of the success factors. Startups must win people over with positive key performance indicators and compete with other startups looking for capital, especially when searching for investors.

If gathering data in Excel sheets seems too tedious, you can use one of the numerous KPI dashboards. A current contribution from t3n offers a good overview: “10 geniale KPI-Dashboards für Startups und Unternehmen” (10 Ingenious KPI Dashboards for Startups and Companies).